Pubdate: Fri, 24 Jan 2014
Source: New York Times (NY)
Copyright: 2014 The New York Times Company
Authors: Jack Healy and Matt Apuzzo


Attorney General Eric H. Holder Jr. said Thursday that lawful 
marijuana businesses should have access to the American banking 
system and that the government would soon offer rules to help them 
gain it. The rules are not expected to give banks a green light to 
accept deposits and provide other services, but would tell 
prosecutors not to prioritize cases involving legal marijuana 
businesses that use banks.

"You don't want just huge amounts of cash in these places. They want 
to be able to use the banking system," Mr. Holder said at the Miller 
Center at the University of Virginia. "There's a public safety 
component to this. Huge amounts of cash, substantial amounts of cash 
just kind of lying around with no place for it to be appropriately 
deposited, is something that would worry me, just from a law 
enforcement perspective."

For marijuana growers and retailers in the 20 states that have 
legalized the drug for recreational or medical use, money and banking 
are perhaps the most vexing challenges of doing business. Piles of 
cash accumulate in back rooms and safes, making the businesses, their 
employees and their customers a target for robberies. Businesses 
often have no access to business loans or regular lines of credit. 
Many say they struggle to even keep a checking account open to pay 
their employees or electricity bills.

"It's a security risk not just for the industry but all these other 
folks," said Michael Elliott, the executive director of the Medical 
Marijuana Industry Group, who added that he was encouraged by Mr. 
Holder's comments.

Most banks remain leery of accepting deposits from a marijuana 
dispensary, for fear that they could lose their charter, attract 
unwanted attention from regulators or even risk prosecution for money 
laundering. And it was unclear on Thursday what exactly the new 
federal guidelines would say, and whether they would apply to states 
that allow medical marijuana, or just to Colorado and Washington, 
where the drug is legal in small amounts for anyone 21 or older.

For the banking industry, the details of the guidelines will be 
crucial for deciding whether banks feel comfortable taking deposits, 
giving loans or issuing credit cards to legal marijuana businesses. 
Without specific guidelines, many banks might continue to refuse 
transactions with legal marijuana businesses.

Richard Riese, senior vice president for regulatory compliance at the 
American Bankers Association, said this month that banks would want 
to know, for instance, that they were not "aiding and abetting" a 
criminal enterprise if they provided such services.

"Banks will need a lot of detail from regulators to get the 
satisfaction and comfort they are looking for," he said.

For months, elected officials and law enforcement agencies in states 
that have legalized marijuana have urged federal officials to offer 
guidelines that would clarify the government's stance on banking and 
marijuana businesses.

While marijuana is illegal in most states and is prohibited under 
federal law, the Obama administration said last summer that it would 
allow Colorado and Washington State to move ahead with legalizing the 
drug for recreational use.

In a recent interview with The New Yorker, President Obama said that 
despite his misgivings about marijuana and the push for broader 
legalization of the drug, it was important that Colorado's and 
Washington's experiments go forward.

"It's important for society not to have a situation in which a large 
portion of people have at one time or another broken the law and only 
a select few get punished," he said.

Andy Williams, who runs Medicine Man, a dispensary in an industrial 
park in Denver, said dependable access to bank accounts and credit 
could revolutionize his business.

Like many other retailers, Mr. Williams is sometimes drowning in 
cash. He said he has hired an armored-car service to move his money, 
and tries to pay his bills in cash as much as possible to reduce the 
amount he has on hand. He continually jumps from one bank to another 
when financial institutions decide his account is not worth the risk. 
To try to keep the banks from catching on, he said, he even sprays 
his cash with Febreze to disguise the scent of marijuana.

"We're always scared, if we have a bank account, about keeping it," 
he said. "We go to great lengths to lower our profile."
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MAP posted-by: Jay Bergstrom